Development has been a ‘push’ model – not ‘pull’ Processors have generally been “harvesters” not proactive in sourcing milk and sharing value Skill and experience base of ‘technical service’ frequently not sufficient Lack of access to capital Lack of access to appropriate technology

1. Enterprise Based Dairy Development
Trevor Tomkins Ph.D.
Founder and President venture | dairy
Transitioning from Development to Commercial Investment in Africa
Africa Dairy Association Conference
September 2014

2. Nairobi, Kenya – September 2014 | 2
Contents
 Historical Perspectives
 Enterprise Model
• Shared Values
• Upstream Needs
• Downstream Opportunities
 Summary

3. Historical Perspectives - Background
 Development has been a ‘push’ model – not ‘pull’
 Processors have generally been “harvesters” not
proactive in sourcing milk and sharing value
 Skill and experience base of ‘technical service’
frequently not sufficient
Nairobi, Kenya – September 2014 | 3
 Lack of access to capital
 Lack of access to appropriate technology

4. Historical Perspectives – The Present
 Low milk yields, poor feed efficiency <1 kg milk per kg
of feed
 Poor quality milk, contaminated, adulterated
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 Lack ability for expansion
 Aging farming population
 Entrepreneurs without opportunity
 Need to connect the whole value chain
 Need public-private partnerships that WORK

5. FARMS FEED/SERVICES COLLECTION PROCESSING MARKETS
Nairobi, Kenya – September 2014 | 5
Capacity Building
Fair Price Supply Contracts
Anchor
Processing
Production
Platform Farm(s)
Extension Services
Cooperative
Support
Technical Assistance
Dairy Hub
Feed/Feed analysis
Premixes/concentrates
Veterinary/Supplies
Quality Laboratory and
support
Micro loans
Services, AI
Collection
Transportation Solutions
Chilling
Quality Laboratory and
testing
Digital payment to
producers
Hygiene control
Technical support
Capital lntensive
Pull Through for Supply
Chain
Services Multiple Dairy
Hubs
Services Multiple
collection Centers
Packaging
Formulation innovation
Products deeper into
economic pyramid
Marketing/Sales/
Distribution
• Liquid milk
• Fortified milk
• Flavored Milk
• Milk powder
• Butter/ghee
• Paneer
• Yogurt
• Cheese
• Ice Cream
• Whey
• UHT/ESL/Pasteurized/raw
• Research and
Development
• Product innovation
• Point of sale packaging
• Distribution methods
venture | dairy - Shared Value
‘Pull’ versus ‘Push’
Farmer focused processing
Farmer and Employee Ownership

6. venture | dairy - Development through Enterprise
impact model – “pull not push”`
Market Driven
Profit Motivation
Accelerating
Economic Development
Operational
Expertise
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Social Impact
Replicable Platform
Scalable Enterprises
Commercial returns
for investors
Filling a missing link –
milk processing
Business skills
Technology
Management
systems
Finance
Dairy know-how
Technical Expertise Networks
Entrepreneurial
empowerment
Anchor processing
firm-based projects
Value chain enhancement
Increased opportunities
for women
Improved food
security
Job creation
Smallholder
farmer benefits
Improved nutrition
Positive environmental impact
--Climate change
--Water sparing
--Waste reduction
Strategic Project Partners

7. NGO FOCUS MISSING LINK
Nairobi, Kenya – September 2014 | 7
Dairy Value Chain: As Is
 Inefficient use of and
waste of feed and fodder
 No nutritional analysis of
feeds fed to cows
 Animal disease
 Poor genetics
 Unhygienic milking
conditions
7
Production /
Farmers
Delivery /
Collection
Informal Retail
Markets
 Poor road infrastructure,
no accessible collection
 Insufficient cooling
 Milk waste and spoilage
 Low quality and high
pricing of the products due
to middlemen
 Inadequate or missing
facilities
 Poor or missing quality control
procedures
 Old or inefficiently operated
facilities
 Lack of attention to product
market demand
 Milk waste and spoilage
 No transparent pricing
mechanism
 Products unsuitable for
mass market, i.e.,
perishable products, large
package sizes
 Inflation of prices by
informal market
Challenges

8. Dairy Value Chain: Market Improvements
Improvements Required
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Production/
Farmers
8
Processing
Products
and
Packaging
Markets
Dairy Hubs/
Collection
 Balanced diet and
water
 Animal vaccination and
veterinary care
 Modern genetics
(artificial insemination)
 Forage preservation
 Improved hygienic
conditions
 Training and education
to farmers
Well-managed and
mobile collection
 Readily available
technology and
improved infrastructure
Record-keeping
 Quality control
 Transparent pricing
 UHT processing
 Pasteurization
 State-of-the-art
technology
 Provision of regular
demand to farmers
 Consumer market
development
 Pasteurized or UHT
milk
 Smaller packaging
 Product
diversification and
value-add products
 Fortification
(+nutrients)
 Professional
marketing and
product placement
 Branding

9. Nairobi, Kenya – September 2014 | 9
Economic Farming Units

10. Nairobi, Kenya – September 2014 | 10
Best Production Practices

11. Nairobi, Kenya – September 2014 | 11
Dairy Hub Concept
GENETICS VETERINARY
SERVICES
RECORD
KEEPING
MILK
COLLECTION-QUALITY
ANIMAL
HEALTH
ARTIFICIAL
INSEMINATION
PRESERVATION
FEED
FORAGE
NUTRITION
SMALL HOLDER FARMERS SATELLITE HUBS
MILK
MARKET PROCESSOR

12. venture | dairy Financial Model
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NGO’s may support
capacity building
(non dilutive)
Non-profit partners
DiDC, Heifer
International, others
venture | dairy LLC
investment company
Dairy Hubs provide
services & products.
Set up model farms
Processing facilities
make products
Butter, cheese,
ghee, paneer
UHT and Yogurts
non-UHT
products
Collection centers
sell milk to
established markets
Small holder
farmers

13. Nairobi, Kenya – September 2014 | 13
Summary
 A transition will only occur when three critical things
happen
• There is transparency along the value chain in terms of
pricing and access to markets
• NGOs understand that access to capital (both debt and
equity) is the fundamental for change
• There is access to appropriate technology and supported
by qualified and experienced technicians
• FARMERS THE WORLD OVER LEARN BY BEING SHOWN
AND NOT BY BEING TOLD

14. Nairobi, Kenya – September 2014 | 14
Summary (cont’d)
 We need:
• Milk processors who will work upstream to provide
extension service, the payback is real
• Platform farms that will show best practices
• Providers of low cost farm infrastructures and
equipment against which financial institutions will
lend money
• Fair and equitable sharing of the value created along
the value chain

15. Enterprise Based Dairy Development
Trevor Tomkins Ph.D.
Founder and President venture | dairy
Transitioning from Development to Commercial Investment in Africa
Africa Dairy Association Conference
September 2014